Motorola: Financial Engineering Does not Mean Product Success

Motorola (MOT) announced last week that they will split into two different units: One with the problem child handset products that is losing market share and does not seem to have anything to offer, and the other with all the other stuff that seems to be going reasonably well. It would be a precursor step to selling off the handset division.

Financial media is making much of the fact that this seems to be what Carl Icahn has been demanding. Apparently he has 6% and knows how to get a headline or two. Okay, Icahn is correct in criticizing Motorola’s efforts in handsets. But what say the other 94% of investors who have been experiencing great financial pain. Is the tail wagging the dog?

Consider some of these points when assessing the future of Motorola.

1. Will someone out there actually want to buy the handset unit at a close to reasonable price?

2. Does Motorola have something to offer handset consumers that will be compelling in some fashion?

3. If the division is sold off will the remaining shareholders be penalized. After all, they have taken the pain only to see someone else come in, take the asset and make a profit. There are those who would view such a move as a form of theft wrapped in corporate governance.

The easy shouting is over. The heavy lifting is about to begin.